Working Paper: NBER ID: w0812
Authors: John F. Boschen; Herschel I. Grossman
Abstract: This paper describes an empirical study of the effects of federal minimum wage policy on aggregate employment, on the employment of various demographic groups, and on employment in low-wage industries. The analytical framework permits separate testing both for direct employment effects of the level and coverage of the minimum wage and for indirect employment effects resulting from a possible role for the minimum wage as a cause of monetary nonneutrality. Another innovation in this study is the inclusion of rational expectations of expected future relative minimum wages as determinants of the demands and supplies of labor services. The study finds that minimum-wage policy seems not to affect aggregate employment or average wages either directly or indirectly. Minimum-wage policy, however, has large and statistically significant effects on the industrial and demographic composition of employment, with employment decreasing in certain low-wage industries and for teenagers and for young men but increasing for young women and for adults. A major part of these effects are associated with anticipated future changes in the level of the minimum wage.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage policy (J38) | aggregate employment (E10) |
| minimum wage policy (J38) | average wages (J31) |
| minimum wage policy (J38) | industrial composition of employment (L79) |
| minimum wage policy (J38) | demographic composition of employment (J21) |
| minimum wage policy (J38) | employment in low-wage industries (J21) |
| minimum wage policy (J38) | employment for teenagers and young men (J21) |
| minimum wage policy (J38) | employment for young women and adults (J21) |
| anticipated future changes in minimum wage (J38) | labor supply and demand (J20) |